Australia home price growth cools in October: RPData

Monday's figures from property consultant CoreLogic RP Data showed dwelling prices across the major cities edged up 0.2 percent in October, from September when they climbed 0.9 percentReuters | November 02, 2015, 14:00 IST

SYDNEY: Growth in home prices across Australia's capital cities slowed in October as tightened rules on investment lending and rising mortgage rates let the steam out of the Sydney market.

Monday's figures from property consultant CoreLogic RP Data showed dwelling prices across the major cities edged up 0.2 percent in October, from September when they climbed 0.9 percent.

Annual growth in home values dipped to 10.1 percent, from 11.0 percent in September. Again, the headline numbers masked wide divisions between cities.

For October alone, Sydney prices nudged up by 0.3 percent, while Melbourne rose 0.6 percent after a big increase the month before. Prices fell in Brisbane and Perth, while Adelaide enjoyed an unusually strong month with a gain of 1.5 percent.

Annual price growth in Sydney stood at 15.6 percent, with Melbourne just behind at 12.8 percent. Sydney had the highest median dwelling price of A$800,000 ($570,000), followed by Melbourne's A$600,000.

Regulators have reacted to the bullish conditions in Sydney and Melbourne by tightening lending standards for property investment with the aim of keeping annual growth in investment lending at 10 percent or less.

The major Australian banks also announced increases in mortgage rates last month both for investors and home owners, blaming higher regulatory costs.

"It's not just the fact that mortgage rates have recently risen outside of any lift in the cash rate," said RPData head of research Tim Lawless.

"We are also seeing approximately a 30 per cent premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit."

Home prices have come a long way, with median values in Sydney up 77 percent since the end of 2008, and policymakers are keen to see a slowdown in price growth.

Lawless also noted that gross rental yields had fallen to record lows of 3.4 percent for houses and 4.3 percent for apartments. (Reporting by Wayne Cole; Editing by Eric Meijer)